Gold rose early Friday as new tariff threats against Canada from U.S. President Donald Trump and speculation about monetary policy increased haven demand for the yellow metal.
Trump on Thursday threatened to impose a 35% tariff on Canadian imports in the middle of talks on a trade deal between the two countries. He shared a letter to Canadian Prime Minister Mark Carney on social media in which he said the new levy would go into effect Aug. 1. Separately, the minutes of the last Federal Reserve policy meeting, which were released Wednesday, renewed speculation on the number of rate cuts the Fed will impose this year.
August gold futures edged up $4.70 Thursday to settle at $3,325.70 an ounce on Comex, though the front-month contract slid 0.5% in the first four days of the week. Bullion slipped 0.2% in June after losing 0.1% in May and increasing 5.4% in April. It’s up 26% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The August contract is currently up $42.10 (+1.27%) an ounce to $3367.80 and the DG spot price is $3354.00.
The details of Trump’s threat against Canada were unclear, with uncertainty about whether the tariffs he discussed would apply to all Canadian goods. He also indicated that the levies were negotiable ahead of an Aug. 1 deadline. Gold is a traditional hedge against geopolitical and economic uncertainty, such as Trump’s tariff threats.
Trump’s budget chief separately accused Fed Chairman Jerome Powell of mismanaging U.S. monetary policy and reiterated a call for the central bank to cut interest rates. Rate cuts are traditionally bullish for gold.
San Francisco Fed President Mary Daly said Thursday that she continues to view two rate reductions this year as likely. The minutes of the June Fed policy meeting, released Wednesday, show policymakers are divided on how many rate cuts will come this year. Committee members were split between concerns over inflation fueled by Trump’s tariff policy and signs of labor market weakness.
Next week will bring key U.S. inflation reports which may lend further direction.
Most investors are still betting that the Fed will begin rate cuts at its September meeting, not the next one at the end of this month, according to the CME FedWatch Tool. The Fed kept interest rates unchanged at 4.25% to 4.50% in June, though policymakers signaled that the central bank is still factoring two interest rate cuts this year. The Fed reduced rates three times in 2024 but has held them steady this year. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
Front-month silver futures rallied 1.8% Thursday to settle at $37.31 an ounce on Comex, and the most-active September contract is up 0.6% so far this week. Silver increased 9.5% in June after adding 0.6% in May and dropping 5.2% in April. It rose 21% in 2024. The September contract is currently up $1.245 (+3.34%) an ounce to $38.555 and the DG spot price is $37.69.
Spot palladium rose 3.4% Thursday to $1,156.50 an ounce and is up 0.3% so far this week. Palladium surged 14% last month after advancing 2.8% in May and falling 4.9% in April. Palladium dropped 17% last year. The DG spot price is currently up $56.10 an ounce to $1193.50.
Spot platinum gained 0.8% Thursday to $1,373.80 an ounce, but fell 0.7% in the first four days of the week. It climbed 27% last month after gaining 8.6% in May and retreating 3.1% in April. Platinum lost 8.4% in 2024. The current DG spot price is up $47.40 an ounce to $1382.00.
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